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Barron's Roundtable 2009 notes

We offered up some notes on part one of the 2009 Barron's Roundtable earlier this month, and that (as expected) turned out to be a popular feature with readers and new visitors.

Today, as promised, we finish off this year's coverage with the final installments of the 2009 Roundtable. Let's get right to it with a few quick notes on these discussions.

As is my usual custom with the Barron's Roundtable issues, I tried to limit myself to reading only the segments with the investors whose opinions I value. That basically leaves one half to two-thirds of the Roundtable untouched, and that's more than fine with me. I learned long ago that I just don't have the time for other people's nonsense.

If you'd like to evaluate all the panelists' picks, you're more than welcome to. We'll just highlight a few key thoughts from parts two and three here. Let's start off with a few words from Felix Zulauf in part two of the Roundtable issues.

" Zulauf: …

Davos: George Soros on pound, bad bank

When you look at the Bloomberg home page and see an image of George Soros sitting on a snow covered hill in a winter coat, you know that the Davos circus is in full swing.

Soros talked to Bloomberg about the US' plans for a "bad bank", which he says won't increase bank lending (but "will bring some relief"), and how the falling price of oil will affect the major oil-producing nations (Venezuela, Russia, and Iran) and their regimes.

Soros also spoke about the British pound at Davos, saying that he had foreseen the fall in the UK's currency, but that he is no longer short the pound at these levels.

Hedge fund manager Peter Thiel, who apparently is also at Davos, disagrees with Soros. He thinks the British pound will continue to decline this year, while the US dollar and the yen appreciate.

Thiel seems to be echoing Jim Rogers' gloomy view on the currency and the UK as a whole, calling the country, "the worst country in the world at this point"…

Ron Paul on stimulus & the economy

Ron Paul recently penned a series of opinion pieces on the US economy and our current "stimulus mania" (H/T: Bear Mountain Bull).

As usual, Paul's thoughtful essays on government interference in the economy and our lives are right on target. Here's an excerpt on the from his latest piece, "Stimulus for Who?":

"This week the House is expected to pass an $825 billion economic stimulus package. In reality, this bill is just an escalation of a government-created economic mess. As before, a sense of urgency and impending doom is being used to extract mountains of money from Congress with minimal debate. So much for change. This is déjà vu.

We are again being promised that its passage will help employment, help homeowners, help the environment, etc. These promises are worthless. This time around especially, Congress should know better than to pass anything of this magnitude without first reading the fine print. There a many red flags that I have found in thi…

Sovereign risk and UK credit ratings

Last week, investor Jim Rogers made some rather gloomy comments about the UK's economic prospects given its "stupendous debts", adding that he would not hold the pound sterling.

While Rogers' comments provoked some rebuttal from bankers inside the UK, the debate over the state of the nation's economy comes at a time of increased worry over possible credit rating cuts for sovereign debt issuers, like the UK and the US.

The ratings risk for sovereign issuers is foremost in investors' minds, given the recent string of ratings cuts that hit European nations in the past two weeks. Greece, Spain, and Portugal were all party to recent credit rating downgrades by rating agency Standard & Poor's.

And some think Ireland could be next on the chopping block:

"“Portugal is not the first, not the last,” said Marc Chandler, head of currency strategy at Brown Brothers Harriman & Co. in New York, adding that Ireland was the “next obvious candidate” for a downg…

The new blog: Trader Rock

Yes, I've found a new outlet for my rock n' roll madness.

Trader Rock, is my new music focused blog. It's live as of tonight, and I'll be updating it with new links and videos as the week progresses.

Those of you who have come to know and love/fear/despise our occassional jukebox post series will appreciate/run screaming from this latest venture.

There will be no "reality TV" programming, award shows, or clips from an Eagles reunion, so we probably won't attract much venture capital or advertising. That's cool by us; we are just looking for a place to rock out. We'll see you there, if you are too.

Oh, and those gentlemen in the banner above? Until last fall they worked for JP Morgan and Barclays. They have since grown their hair and taken their act to the streets. Ladies, watch out for these guys.

Features of the week

We lead off this week's "Features" post with a new FT.com interview with Jim Chanos, plus a great deal more on the economy and the markets. Enjoy the show!

1. Hedge fund manager Jim Chanos on FT's "View from the Top".

2. "Washington confident it can forge recovery plan" - NY Times.

Given their recent schemes, I'm quite confident about their ability to cook up some ridiculous new spending plan. But what are the long-term effects on the economy? - ED

3. Can fiscal stimulus revive the US economy? - Frank Shostak.

4. Jim Rogers says, "let the incompetent people go bankrupt".

5. UK economy shrinks most since 1980, in recession.

6. Debating the right way to close Guantanamo Bay facility

7. In depth coverage of Obama's first hundred days - FT.com.

8. How the recession is influencing divorces.

9. Difficult to tell if TJ Maxx is hit hard by recession -The Onion.

10. Global credit crunch has cost Arab nations $2.5 trillion.

11. Frank Barber…

Singing the Middle Class Blues

In yesterday's post on Gerald Celente's FSN interview, I called attention to Celente's views on the struggling middle class and the ongoing trend towards "squeezing the little guy" via inflation and increased taxation.

This made me think back to a report Pew Research report released last year called, "Inside the Middle Class: Bad Times Hit the Good Life".

In their survey report, Pew found many Americans rather downbeat over their economic progress made in the previous five years. At the same time, a majority of those surveyed felt their standard of living was greater than their parents enjoyed at the same age.

Most survey participants also expressed optimism over the coming five year period, and "most expect their children to do better in life than they themselves have done".

Despite their optimism for the future, 79 percent of the survey respondents felt that it was more difficult for middle class people to maintain their standard of living at…

Gerald Celente FSN interview

In Tuesday's notes, I pointed to a recent radio interview with Trends Journal editor, Gerald Celente at the Financial Sense Newshour.

I found the interview so worthwhile that I wanted to highlight it again in its own post. I'm sure those of you who are interested in the shape of things to come, economically and culturally speaking, will find it a worthwhile listen as well.

FSN host Jim Puplava starts off by noting the accuracy of Celente's prediction regarding the "Panic of '08", but it's not his predictions or forecasts that really interest me. It's his no nonsense take on what's happening right now that impressed me most.

Listening to the broadcast, I was struck by Celente's willingness to discuss current realities in a way that most media stand-bys won't. Check out his thoughts on taxation and the "squeezing of the little guy" to hear exactly what I mean. I think you'll find the honesty and clarity refreshing.

Tuesday's notes: markets and Obama

It's the start of another US share trading week, and our new president, Barack Obama is being sworn in today.

Let's find out all about it and get the week started with some of the stories we've been watching.

1. Nouriel Roubini says US losses from the credit crisis may reach $3.6 trillion, and that the banking system is "effectively insolvent".

2. Gas flows through Europe as Russia-Ukraine dispute thaws.

3. New York Times has coverage of President Obama's inauguration.

4. Time to sell US treasuries, says South Korea's biggest fund.

5. Jim Rogers says he's worried about the dollar, favors China.

6. Rogers also has some choice words on the UK (w/ video).

7. Gerald Celente and Paul Kasriel FSN broadcast interviews.

Thanks for checking in. We'll have more as the week unfolds.

By the way, if you have yet to see PBS's series, "The Ascent of Money" with Niall Ferguson, I highly recommend it. Click the link to watch to the full program.

Niall Ferguson: The Ascent of Money (PBS)

Niall Ferguson is our guide on a tour of monetary history and financial crises in the recent PBS special, "The Ascent of Money"

Ferguson was a recent guest on Bloomberg Night Talk, where I first heard about this PBS program based on his recent book of the same title. 

Now that the program is up on (edit) Youtube and the PBS website (sharp video quality and additional content there), I'll be interested to see how Niall puts this latest global financial crisis into historical context.

Enjoy the video!

Features of the week

Get set for our, "Features of the week".

1. Consumer prices show smallest gain in 54 years.

2. The bailout endgame: drama of Citi and Bank of America.

3. Audacity defined: David Kotok on Geithner and Obama.

4. Stimulating comments: Bernanke on further bank bailouts.

5. Joseph Dancy's market outlook for 2009.

6. Credit crisis watch: gaining positive traction.

7. There's unemployment, and then there's unemployment.

8. John Paulson: "the man who made too much" (Portfolio).

9. Long ring finger may point to wealth in traders, study finds.

10. Gary Shilling says banks may need more federal bailouts (video).

11. Wilbur Ross considers buying large banks (video).

12. Security net wraps capital for inaugaral.

13. Pension pandemic: part one, part two.

14. Apple's Steve Jobs takes leave of absence to deal with health.

15. Are too many people going to college?

16. Hyperinflation: Zimbabwe's worthless trillion dollar notes.

17. Mish on the most galling statement of the …

A bear market in crude oil

Crude oil was off as much as 10 percent during Thursday's trading on the NYMEX, before closing the session 5 percent lower at $35.40. Reuters has the story.

"Oil prices fell more than 10 percent on Thursday to a one-month low as thickening economic gloom added to expectations that world energy demand would keep shrinking.

U.S. crude fell $3.74 to $33.54 a barrel by 1:30 p.m. EST, after falling as low as $33.20 -- the lowest since December 19. London Brent fell 90 cents to $44.18 a barrel, maintaining an unusual premium to the U.S. benchmark...

..."We have gotten more dire economic news and the notion is that 2009 will not result in any significant turnaround, with sentiment mounting that may happen in 2010 instead," said Jim Wyckoff, independent energy analyst in Cedar Falls, Iowa.

The gloomy global economic outlook prompted OPEC on Thursday to forecast a fall of 180,000 barrels per day in world oil demand this year, 30,000 bpd steeper than its previous forecast."

A…

Overheard at Barron's Roundtable 2009

For those who haven't seen it, part 1 of Barron's Roundtable 2009 is out on newstands this week and online at Barron's web site.

Since most Barron's readers have probably already bought this week's issue, I see no harm in reviewing the online version of this year's Roundtable.

Although, given the performance of last year's Roundtable picks, I can see why the assembled crew might not want to dwell on 2008! Felix Zulauf seemed to fare best, replicating his strong performance in last year's Roundtable.

For 2009, the gang seems pretty downbeat, acknowledging the problems associated with this bear market and the recent period of delevaraging.

In fact, most of the participants (Bill Gross, Oscar Schafer, Mario Gabelli, Felix Zulauf, et al) spoke of things like rising unemployment, lower corporate profits, and the perceived need for government stimulus programs. Not exactly the stuff that economic dreams are made of.

Still, I think most were hesitant to come off…

Atlas Shrugged: from fiction to fact?

Came across an interesting editorial from Stephen Moore in the Wall Street Journal (hat tip - Safehaven).

In this January 9 piece entitled, "Atlas Shrugged: From Fiction to Fact in 52 Years", Moore suggests that the fictional scenarios laid out in Ayn Rand's classic novel have largely been realized today, thanks to ever-increasing bailouts and government intervention into the economy.

Here's a summary excerpt from Moore's column:

"...Many of us who know Rand's work have noticed that with each passing week, and with each successive bailout plan and economic-stimulus scheme out of Washington, our current politicians are committing the very acts of economic lunacy that "Atlas Shrugged" parodied in 1957, when this 1,000-page novel was first published and became an instant hit.

Rand, who had come to America from Soviet Russia with striking insights into totalitarianism and the destructiveness of socialism, was already a celebrity. The left, naturally…

Wes Anderson interviews Peter Bogdanovich

Wes Anderson interviews Peter Bogdanovich.

One of the many cool interviews that I've come across lately on YouTube, here's director Wes Anderson interviewing fellow filmmaker (and likely mentor), Peter Bogdanovich.

I always find it interesting to see or read an interview conducted by someone who happens to share the interviewee's profession and outlook on things.

If you're a fan of either director's work, I hope you'll enjoy this engaging little chat between two filmmaking stars, recorded for the 25th anniversary release of Bogdanovich's film, They All Laughed.

Quick interview note: I was interested to hear Bogdanovich's comments on the benefits of the Hollywood studio system, and the aspects of that talent contract framework which helped improve the writing quality of certain film scripts.

His comments seem to echo a similar point made by TCM's Robert Osborne on the relative ease of assembling all-star ensemble casts under the contract system in pla…

Features of the week

Good news, bad news, you know I've had my share...and we're bringing you all the latest in our, "Features of the week".

1. Worst year for US jobs since 1945.

2. Congressional panel steps up criticism of Treasury over TARP.

3. Satyam fraud case sparks corporate ethics debate in India.

4. UK cuts rates to 315-year low to boost lending.

5. What would Sir John Templeton say about the financial panic?

6. Investment Postcards recaps the markets of 2008 and looks ahead to 2009.

7. Where (and how) to invest in 2009 - Financial Philosopher.

8. Leave the past in the past and welcome 2009 - Kirk Report.

9. FT Short View: Bears in the money.

10. Are we witnessing the ultimate bull trap?

11. You will not be missed: list of Macy's store closings.

12. Supertanker freed after ransom was paid, pirates say.

13. Jim Chanos says hedge funds face regulation.

14. Nouriel Roubini feels the worst is still ahead of us.

15. US debt is losing its appeal in China.

16. Mike Hewitt on the fate of paper m…

Rakesh Jhunjhunwala on FT.com

Famed Indian stock investor and trader Rakesh Jhunjhunwala recently sat down for an interview with FT.com's "View From the Markets" video series.

I'm sure many of our Indian and Asian readers are familiar with Jhunjhunwala's career, but for those outside the region who may not know him, check the Wikipedia link above for a brief introduction to the man currently tagged as the "Warren Buffett of India".

Those who are familiar with Rakesh's reputation as one of India's most prominent stock bulls (he has also played the short side with success) may be unsurprised to hear his view that the "mother of all bull markets" in Indian shares lies not too far ahead.

Click on the interview link to find out why he feels Indian shares will be an attractive opportunity in the years to come. You can also find out more about Jhunjhunwala's investing and trading background in the following related articles and links below.

I find it fascinating to lea…

Marc Faber on base metals, shares, economy

Marc Faber joined Bloomberg in the studio to discuss his outlook for 2009, and to offer his views on favorable areas for investment in the year ahead.

Here's a quick summary of points made in this studio interview:

· Marc's dour economic view for 2009 is maintained, though he notes that we may have some positive news over the next few months, providing a temporary break in the gloom.

· Faber chuckles at the mention of the "Obama plan" to stimulate the economy. He points out that government intervention in the economy will prove disastrous in the long run.

While everyone clamors for the government to "do something" to avoid the economic pain, Marc feels that the best policy is to do nothing and let the needed corrections take place. "If people can not accept the downside of capitalism, they should become socialists".

· Industrial commodities and metal mining shares imploded last year, while gold held up in price. As of today, Marc would rather buy a …

Hedge funds fight to survive shakeout

This week's issue of Barron's takes on the great hedge fund industry shakeout of 2008-2009, in a story called, "Hedge Funds Meet Their Match".

Here's an excerpt from that piece:

"Hedge fund managers, the stars of the investing world for most of this decade, were brought to their knees in the turmoil of 2008. The average fund fell far short of its goal of "absolute returns," posting an 18% loss through November.

Old standby strategies, such as buying some stocks and selling others short, suddenly stopped working. Customers bolted in record numbers. Then, at year's end, the industry got a black eye for putting money in Bernard Madoff's black box.

"The hedge fund is being questioned, and it's in danger," says Timothy Brog of Locksmith Capital Management, an activist New York hedge fund.

Indeed, the industry is moving into survival mode for 2009 -- and many funds won't make it. The number of hedge funds, which surged in recent y…

Bloomberg's 2008 art market review

Have we just seen the end of the 2000s art-market bubble?

Bloomberg recently published a two-part article series on the state of the art market in 2008. As their coverage of the year just ended shows, the tenor in the market changed as the spreading financial crisis hit rich art buyers, leading auction sales and prices for contemporary art to stall out.

Long-time readers of this blog know that we occassionally delve into the subject of art here, so let's turn to Bloomberg's coverage to learn more about the recent slump in this once-booming market.

Excerpt from part one of Bloomberg's series, "How Monet, Freud, Hirst records led art-market bubble to burst":

"Art prices extended a seven-year surge for much of 2008, with a Claude Monet painting of water lilies, Lucian Freud’s portrait of a civil servant called Sue and a Francis Bacon triptych setting records.
A 111.5 million pound ($162 million at current rates) sale of Damien Hirst works in September featured pi…

Skaters ride the California foreclosure wave

It seems California skateboarders are once again taking advantage of a rare window of opportunity.

Thanks to the recent wave of house foreclosures, many California homes have been abandoned, leaving backyard pools neglected and open for (pool-riding) business.

Area skateboarders have been quick to scour their neighborhoods for empty backyard pools, just as their predecessors did during the mid-1970s drought. Only this time, they're locating pools with a little help from realty tracking websites like realtor.com.

Excerpt from, "Skaters jump in as foreclosures drain the pool":

"...On a recent morning, a 27-year-old skateboarder who goes by the name Josh Peacock peered into a swimming pool in Fresno, Calif., emptied by his own hands — and the foreclosure crisis — and flashed a smile as wide as a half-pipe.

“We have more pools than we know what to do with,” said Mr. Peacock, who lives in Fresno, the Central Valley city where thousands of homes, many with pools behind th…

Onwards to the future!

"And remember my friends, future events such as these will affect you...in the future!" - The Amazing Criswell.

There isn't much we can say yet about 2009. The year is too new, and the memory of last year's financial calamities are still fresh in our minds.

Will the new year bring forth an extension of the trends that unfolded during 2008? How will the current US recession affect the struggling middle class and the younger generations who have never really experienced "hard times" on a national scale? Will global stock markets surprise everyone and rally?

These are just some of the questions floating around in my mind (and in the minds of many others, I'm sure).

Yet at the same time, I wonder if we can really begin to answer any of these questions with any level of certainty. I also wonder: "does it really matter"? Which is a strange thing to think about, especially if you're like me and you happen to write a blog about current and future f…